Japan’s Lower House Advances Bill to Regulate Crypto Like Securities

Japan’s House of Representatives has passed a bill that would shift cryptocurrency regulation from the Payment Services Act to the Financial Instruments and Exchange Act, putting digital assets closer to stocks and other investment products in Japan’s legal framework.

The change matters because Japan’s Financial Services Agency says crypto has become a more mainstream investment asset. According to data cited by the agency, Japan has more than 14 million open crypto accounts, with users earning under 7 million yen, or about $43,600, accounting for roughly 70% of those accounts.

The rules are expected to take effect next year and would classify crypto assets as financial instruments. CoinDesk reported that the shift would bring lower taxes, stricter trading rules and could open the door for products such as crypto exchange-traded funds.

The bill also introduces stock-market-style restrictions on insider trading in crypto. Under the proposed framework, company insiders or exchange employees would be barred from buying or selling tokens when they know nonpublic material information, such as an exchange listing or delisting plan.

Disclosure requirements would also tighten. Projects would need to provide clearer public information about their technology, supply and business finances. Token issuers that raise capital without obtaining an independent accounting audit would face a 2 million yen cap on regular investor participation.

Japan is also moving to increase penalties for unregistered crypto activity. The maximum prison sentence for operating an unregistered crypto business would rise to 10 years from three, while fines could increase to 10 million yen.